Page 137 - DMGT205_SALES_MANAGEMENT

Unit 9: Motivating and Compensating Sales Personal

Revise the Plan Notes

The plan is then revised to eliminate trouble spots or deficiencies. If alterations are extensive,
the revised plan goes through further pre-test and perhaps another pilot test. But if changes have
been only minor, further testing is not necessary.
Implement the Plan and Provide for Follow up

At the time the new plan is implemented, it is explained to the sales personnel. Management
should convince them of its basic fairness and logic. Details of changes from the old plan and
their significance require explanation. All sales personnel should receive copies of the new plan,
together with written examples of the method used for calculating earnings. If the plan is at all
complex, special training sessions are held and aimed at teaching sales personnel how to compute
their own earnings.
Provisions for follow up are made. From periodic check ups need for further adjustments is
detected. Periodic checks provide evidence of the plans' accomplishment and they uncover
weaknesses needing correction.

9.10 Types of Compensation Plans

There are only three basic type of compensation plans-straight salary, straight commission and
a combination of salary and variable elements.



Caselet Motivation

artin Corporation the manufacturers of calculating machines had offices located
in Delhi, Mumbai, Calcutta and Chennai, Its sales were quite substantial. Martin
MCorporation was a small company as compared to other giants in the calculating
machine industry. The calculating machines were sold from ten thousand to thirty thousand
rupees. The higher cost machines were very sophisticated and were used by banks and
other governmental institutions. They offered storage, memory, separate keyboards for
calculation and automatic balancing of rows and columns of large tables.

This company also had a sales force of its own and was selling to industrial distributors,
wholesaler of electronic machines and also directly to customers. It had four sales managers,
covering all the four metropolitan cities as given above. The machines were also popular
in Bangladesh and the agency was managed by Abdul Rahman Enterprises, who were
booking orders from Bangladesh as well as asking the company (Martin Corporation) to
ship the goods to Bangladesh. The commission earned by Abdul Rahman Enterprises was
50% on the sales made by them. However, when the order was placed to Martin Corporation
and the company had to ship the goods the commission given was only 10%. The marketing
manager of the company was not satisfied with the sales made by the agency. Their
salesmen were busy in domestic territories and could not give marketing support to the
agency. He however felt that the agents had very big territory to themselves and very
good sale potential. He therefore tried to make an in-depth study of the causes of the low
sales. He came to know that the agents also had a subsidiary plan for repairing machines.
The old machines were repaired at a low cost ranging from 5000-10,000 rupees and these
repaired machines performed very well and were in great demand.
Contd...

LOVELY PROFESSIONAL UNIVERSITY 131